After dabbling in investing, swing trading and HODL'ing, I decided to try something the whole internet thinks is a bad idea, day trading. Two weeks ago I moved my capital to fiat and have been buying and selling BTC for a profit.
I don't think I'm outperforming just holding bitcoin overall, although I have made out better on some of the down days. So why not just hodl?
With the uncertainty in the market, having my investments safely in fiat while I sleep has been quite reassuring, and seems like a much lower risk approach as your not at the mercy of BTC like you are with trading alt coins.
So below are some of the rules I tend to stick by. They are my own observations and may be terrible advice, but for me they have worked.
Buy Low, Sell High
It's kinda the core concept, but people often succumb to FOMO and end up buying high or vice versa. Just think before you submit that order, "Am I buying a high?".
Don't be upset about missed profits
You only made 2%, and then it shot up 10%? Don't be frustrated, you made a profit and didn't expose yourself to any unnecessary risk. Making money isn't a mistake.
Buying low is the important bit
Focus your efforts on determining the bottom rather than worrying about the top. If you get the bottom right, you can just sit back and relax until your risk/reward ratio becomes too much.
Don't go all in on your bottom
Have a reserve of fiat that can be used to get another bottom and reduce your dollar cost average. This means if you miss the bottom your chances of breaking back even are a lot higher as you can offset the price of the false bottom with the new one.
Don't let a trade happen without your consent
It's tempting to say "I'll just put a limit order in at X and not worry about it", which in my experience never ends well, it either doesn't quite fill, or pumps right after it fills and either way you feel like a jackass.
While you hold BTC you are trading
Consider it a job, you wouldn't just leave your desk during an important business transaction and this is the same. As soon as you buy you need to make sure you have nothing planned for the next few hours and can monitor the markets. Nothing worse than missing a sell opportunity because you had other commitments.
TradingView.com lets you get all of the technical indicators and price history that is missing from most exchanges, as well as setting up alerts. I decided to pay for their entry level package and it's well worth it.
If you want a guide on setting up TradingView like mine and what all the pretty colours mean, let me know!
Check the order book
TradingView used to have the coinbase orderbook on display but for some reason it's been removed or borked. So before making a trade it's key to check the order book and see any walls forming and check how they match your theory based on the technicals. For example if you see consistent bounces on the 200 moving average, estimate what that value will be and look for it in the order book to confirm or deny your theory.
Avoid fees where possible
On GDAX you have to pay a fee to make a market order, which is a real pain, and sometimes it is worth it, but always be conscious of whether your gains are going to outbalance the fees.
Stick to one time interval but check others
I use the five minute candles to set my alerts, as it's a popular timeframe which means the technicals have more weight to them.
It's important to check the bigger time frames, get an idea of where we are on the daily and hourly scale.
Feel your profits
One of the nice things about trading to fiat is that it's super easy to withdraw your funds into real money. Set yourself a goal, be it your rent for the month, a new laptop or a shiny new toy, and trade until you have those gains, then go pay for it with your profits!